First home buyer's dream 'shattered' as another Wellington firm goes bust

Wednesday, 18 May 2022

First home buyer Rahul Srivastav's home was almost complete when the construction company building it went into liquidation. (Video first published May 18, 2022)

Rahul Srivastav says he broke down in tears when he received an email saying the construction company building his family’s first home, Jonesy Construction Ltd, had entered liquidation.

He and his wife, Ritika Srivastav’s new home in the Wellington suburb of Newlands now has a “temporarily closed” sign outside it, and despite having paid off nearly all of the construction cost, the couple do not know whether they will receive their home, or get their money back.

The couple received an email from liquidator Grant Thornton on May 11, and Rahul Srivastav said it came out of the blue.

Srivastav said he met with Jonesy Construction director Ben Jones in early April, and was told his home would be completed in four to six weeks.

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First home buyer Rahul Srivastav's home was almost complete when the construction company building it went into liquidation.

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An initial liquidators report states the company had at least 15 sites under construction, and that the liquidators were identifying further sites that may be affected.

The demise of Jonesy Construction follows another Wellington construction company, Armstrong Downes Commercial, entering liquidation at the start of May.

A number of other firms have also gone bust, and Master Builders chief executive David Kelly said the biggest issue was the delay in the supply of materials, which meant work could not be progressed, resulting in cashflow issues.

Srivastav said he had paid roughly $474,000 already for the house, under a progressive payment regime.

Rahul Srivastav said he had joined other affected buyers on a WhatsApp group.

“We are in a situation we never wanted to be. We trusted that guy, and it’s not just me,” Srivastav said.

“I broke into tears to find out that my dream to own a house is shattered.

“I am finding the situation extremely stressful, having sleepless nights since then.”

Rahul Srivastav says he paid roughly $474,000 already for the house, under a progressive payment regime.

Srivastav said he had joined 31 other affected buyers on a WhatsApp group, and many were in a worse position, having paid large amounts towards builds that were less complete.

Srivastav said he was an unsecured creditor, and he did not know what would happen to his home.

The liquidators said in their initial report that Jonesy Construction focuses on residential construction projects throughout the Wellington region and had 27 staff.

Outstanding wages had not yet been worked out, but about $60,000 was owed in holiday pay, they said.

“The director has advised that throughout 2019 and 2020, the company was undertaking work for a developer who faced financial difficulty, resulting in substantial losses to the company, however, it was anticipated that these losses would be recouped from future work and contracts,” the liquidators said.

“The majority of the company’s contracts were Registered Master Builder contracts and were fixed price and were entered into prior to substantial price increases and market fluctuations which caused further losses and time delays that became unsustainable.”

After an assessment of the business’ financial position, advice, and the inability for Jones to continue working in the business due to health issues, it was decided the company should be placed into liquidation to prevent further losses to creditors, the liquidators said.

Secured creditors included Westpac and ANZ, and a number of builders and building suppliers.

The company’s records indicate there are unsecured creditors totalling $2.11 million.

“At this stage, it is unknown if there will be any funds available to make payment to unsecured creditors,” the liquidators said.

“We will be reviewing the contracts for each construction site to understand the company’s position.”

Srivastav signed the contract for his three-bedroom, two bathroom home in 2020, and when he and his wife went to India for their son’s first birthday in February, Jones advised the home would be finished by early April.

He said he felt deceived. Text messages from May 4 from Jones did not mention any impending liquidation, with the developer stating he had Covid-19 and was too unwell to function.

“We are on fire. Savings gone, loan amount drawn, rising inflation and interest rates. Being first home buyers, we must pay rent, mortgage, day care and rising living cost, yes petrol too,” Srivastav said.

“We all know the market is highly volatile and businesses are failing. With the rising building material cost it will cost much more to build the same house now.

“Along with shortage of building material it will take months, or years to complete the construction.”

Ben Jones has not responded to a request for comment. The Jonesy Construction website and Facebook page have been taken down.